The Coworking industry grew 50% between 2016 and 2018 and the variety of options within this market segment is staggering. Boston is no exception, currently, there are around 2.3 million square feet of coworking space in Boston and Cambridge. Last week NAIOP Massachusetts hosted a lively panel discussion covering all things coworking. The panel was moderated by Kristin Blount of Colliers with guests Jessica Hughes of Tishman Speyer, Bryan Koop of Boston Properties, Karina Silvester of Gensler, and Craig Robinson of WeWork.

Aaron Jodka, Chief Economist/Director of Research at Colliers International set the stage for the panel by providing some stats on coworking in Boston and around the globe. While Boston has one of the fastest coworking markets in the country, London and NYC have the largest total markets with WeWork as the single largest tenant in each market. Jodka and his research team certainly expect coworking to continue to grow while lenders in capital markets determine how best to handle deals involving coworking spaces.

As the market grows, traditional office landlords are finding ways to get into the coworking game. Jessica Hughes & Brian Koop discussed how their companies are moving into the coworking space by transforming some of their limited vacant space into a coworking option. Tishman Speyer’s coworking product, Studio, will focus on hospitality and tenant service. Their first foray into this space just opened at Rockefeller Center in NYC with the next location coming to 125 High Street in Boston. Tishman Speyer is working with Gensler on the fitouts for these spaces to ensure a high quality of design.

Boston Properties has transformed a floor of the Prudential Center into Flex – their version of coworking, which is less about shared space and more about more flexible lease terms and ready-to-occupy space. Koop told the crowd the new space has been very popular, being fully leased in its first 1-2 months. As Koop mentioned, the average lifespan of a company is getting shorter and the market is moving away from the “long and strong” leases of old. The goal of Flex is to cater to clients looking for leases in the 1-5 year range.

WeWork, now the We Companies, has been the leader in the space and continues to grow their brand across the globe with locations now in 100 cities. Craig Robinson, WeWork’s new Global Head of Powered by We Services, discussed some of the stats behind the company’s mission to “Create a world where people work to make a life, not just a living”. Generally, 85% of employees are not engaged and around 51% are on the lookout for another job. Employers are finally beginning to realize that the future of work is going to be measured by how people feel and not by the old standards of productivity. Many Fortune 500 companies are already getting ahead of this trend with over 150 of them signed on as WeWork Enterprise members. Enterprise services allow these large companies the ability to offer more creative environments, the flexibility to have offices in multiple cities and the freedom to grow to new markets.

From a design point of view, Karina Silvester of Gensler discussed the broad variations of coworking space. Within this spectrum, there are a few common factors including the need for lots of flexibility along with varied activity-based workstations. Gensler has designed numerous coworking spaces both large and small including the new Reebok headquarters in Boston. For their new space, Reebok wanted a more open plan/flexible space instead of the numerous small offices they had in the past. As Karina also pointed out “the desire to cowork will extend to digital realms as people are working all the time.”

The panelists agreed the coworking model is here to stay and even in the event of a downturn flexibility will prove important. WeWork continues to diversify its portfolio and offerings and other commercial landlords are following suit as the market shifts. Employee expectations are changing and to attract and retain top talent, employers and in turn, landlords are moving to this flexible, community space.

This guest blog post was written by Mike Hoban of Hoban Communications.

Fueled by one of the strongest economies in the nation, the Boston commercial real estate market should continue to thrive for the foreseeable future. That was the conclusion of the enthusiastic panel at the 2017 NAIOP/SIOR Annual Market Forecast held last week at the Westin Waterfront Hotel before a crowd of 450 CRE professionals.

Moderated by David Begelfer, CEO of NAIOP Massachusetts, the panel included Molly Heath, Executive VP, JLL (Cambridge); Ben Sayles, Director, HFF (Capital Markets); John Carroll, Executive VP, Colliers International (Suburbs); Ron Perry, Principal, Avison Young (Downtown); and JR McDonald, Executive Managing Director, Newmark Knight Frank (Industrial). Barry Bluestone, Professor of Public Policy at Northeastern University and Senior Fellow at The Boston Foundation, set the table for the program with an economic forecast that – with one major caveat – bodes well for the long-term health of Greater Boston CRE.

Bolstered by the highly educated workforce provided by the educational and medical institutions located in Greater Boston, the Massachusetts economy has outperformed the U.S. economy nearly every year since 2009. GDP growth for the Commonwealth has generally been in the 2.5 to 3.0 percent range since 2010, a figure that is significantly above the national average of 2.0 during that period. The Bay State has added 355,600 jobs since the recession (including 62,500 last year), an 11.2 percent increase since 2009. The 4.2 percent unemployment rate has led to virtual full employment, and with the tight labor markets, average wages are beginning to increase, albeit slowly. And none of the factors that typically contribute to a slowdown are in evidence.

But despite the positive outlook, there is a looming threat to the overall health of Greater Boston economy, he cautioned. “The housing stock is limited and growing too slowly to meet the demand, and as a result, home prices and rents continue to rise,” said Bluestone, who is one of the co-authors of the Boston Foundation’s 2017 Greater Boston Housing Report Card. The price of housing is pushing workers farther away from the urban core, causing housing prices in traditionally affordable communities to escalate, as well as putting a strain on an overburdened public transit system. The Housing Report Card estimates that the region will need an additional 160,000 housing units by 2030 to accommodate its expanding population (an additional 342,000), “and that is going to be a challenge,” Bluestone concluded.

JLL’s Heath led off the program with an overview of the Cambridge office and lab markets. “The Cambridge market is one of the strongest markets that we track globally at JLL, and it continues to be driven by this incredible demand from the tech and life science clusters,” she stated, adding that the demand is coming not only from organically grown companies, but outside firms seeking to establish an R&D presence in close proximity to MIT, Harvard, and the educated workforce. With a vacancy rate below 3.0 percent, there continues to be upward pressure on rental rates, with office (by 13 percent) and lab (23 percent) soaring well above previous highs. Achieved rents for office space in E. Cambridge are now in the low $90’s (gross), with lab space in the low $80s (NNN). And due to the lack of supply in the market, “we really do believe that there is room (for rents) to run,” said Heath.

Colliers’ Carroll reported that “the suburbs are alive and well”, as the market has added over five million SF of positive absorption since the downturn. There has also been a steady increase in rent growth in the Class A office market, approximately 10 percent since 2009, with new construction in Waltham achieving rents in the low $50s. The Class B market is not faring as well (although there is some rent growth occurring in select markets), with some of the older building stock being slated for repositioning or demolition to make way for senior living, hotel and other non-office uses (including 450,000 SF of properties in Chelmsford). One particularly bright spot is the emergence of biotech in the suburbs. The Gutierrez Company is currently constructing a five-story, 350,000 SF building for EMD Millipore (2018 Q3 completion) in Burlington, Alkermes is “close to signing” a lease for a 250,000 SF build-to-suit in Waltham, and Waltham-based Tesaro is in the market for a 300,000-500,000 SF suburban campus.

Citing the enormous amount of commercial, residential, retail and restaurant development underway in the Seaport and other Boston locations, Avison Young’s Perry observed that “Boston is clearly a different city today than it was even five years ago.” The in-migration to the city by firms seeking talent continues, he said, citing the recent relocations by Reebok, PTC and Alexion to the Seaport, as well as Amazon’s establishment of a Boston presence with the 150,000 SF lease at 253 Summer St. and Rapid7’s relocation to North Station. Demand remains strong Downtown, with over 4.5 million SF of requirements in the market, including nine companies seeking 100,000-500,000 SF. CBD Class A rents range from the mid $40s to the mid $80s (Back Bay high-rise), and vacancy rates in the top floors of the towers (10 percent) are nearly in equilibrium with the lower floors (9.4 percent), as tech companies continue to absorb space on the lower tiers.

NKF’s McDonald reported on the industrial market – the newfound darling of investors and developers – noting the transformational effect that Amazon and e-commerce has had on the product type. With 12.8 percent average annual returns to investors over the last five years, industrial has outperformed both retail (12.1) and multifamily (9.9), driven by feverish demand for “last mile” properties located in urban and infill submarkets. That demand has driven rents “way beyond the norms” of what had traditionally been $5 to $6 psf to the “high single digits and low teens” for buildings such as 480 Sprague St. in Dedham, a 234,000 SF warehouse that straddles the Boston line. And warehouse space located within the urban market, such as 202 Southampton St. in the South End (which lacks basics such as air-conditioning), is fetching $20 psf, based solely on location.

HFF’s Sayles addressed the ‘When will the cycle end?’ question early on his presentation. “End of cycle concerns have largely abated,” he reassured the gathering. “Nobody is really talking about that right now, instead, what people’s biggest concern is, ‘If I sell, what am I going to do with that capital?” He expects pricing for assets to remain flat in the near term with cap rates trending downward. Financing for assets is up by 17 percent from Q3 2016 to Q3 2017, but investment sales for that period declined by approximately 8.0 percent as buyers are choosing longer term holds. Sales volume for Boston is expected to be approximately $13 billion for 2017, with foreign capital again accounting for a significant portion of those transactions.

Begelfer was in full agreement with Sayles’ assessment of the cycle concerns. “Boston is pretty unique. There are only a handful of cities around the country that are experiencing this kind of strong growth,” he observed. “Any slowdown that we see is probably not going to come from the economy, it will be from the cost of construction and land costs, or the pricing of assets. It won’t be caused by a recession, but by our own success,”

Greater Boston’s real estate market has been on a bender – record-shattering sales, huge demand for office space in key submarkets such as Kendall Square and the Seaport and massive amounts of new luxury residential filling up in record time. But will these trends continue?

Solomon McCown and NAIOP Massachusetts teamed up on our first Real Estate Confidence Index to check the pulse of the industry and see if this run will continue – or are we “in the seventh inning?”

From a pool of more than 200 real estate industry respondents, 63 percent feel the Boston market is still rising (either quickly or slowly) and only ONE percent thinks we are already on the decline. Just about a third of respondents (31 percent) say we’ve plateaued. A whopping 76 percent have a positive outlook for our city just one year from now, with almost 56 percent continuing to be confident for the next three years.

See below to dig in on the confidence factors for the submarkets, new vs. existing construction and specific sectors. How confident are you? Let us know in the comments below, or on Twitter at @SMCRealEstatePR or @naiopma.

At the event, Keller Augusta Partners shared these tips below for college students who are interested in a career in Commercial Real Estate.

The Commercial Real Estate industry is very competitive. Successful candidates must be able to demonstrate experience and interest in the CRE field early and often. Here are some helpful ways to break into the industry:

Coursework

Be sure to do exceptionally well in real estate classes (impress your professors!) and maintain high GPA

Highlight significant projects or case work from your courses on your resume

Be specific about your job search & career objectives during networking/outreach conversations

People want to help but being vague puts more work on them

Create your 2-minute elevator speech and practice it!

Skills

Academic performance (GPA/Test Scores) is highly regarded at top firms

Strong emphasis on quantitative skills across many positions

Below are some additional resources available from NAIOP Massachusetts.

Student Association Membership (SAM) programOpen to any full-time student who is not otherwise employed in the industrial, office, multifamily, mixed-use or related commercial real estate industry. Must present a valid school ID and current full-time schedule.

The following blog post was written by Chloe Louise Bouscaren, Marketing and Business Development atCBT Architects.

“An Inventive Setting to Spark Inventive Thinking”

On Wednesday, Nov 9th NAIOP hosted a Members-Only Leadership Luncheon at 101 Seaport Boulevard, the new home for PricewaterhouseCoopers, a multinational professional services network. PwC relocated 3000 employees from 125 High Street to Boston’s Seaport District. Shawn Hurley, the Executive Vice President and Regional Manager of SKANSKA USA Commercial Development hosted NAIOP on the building’s 7th floor, the only space that has yet to be leased. Shawn was joined by Charley Leatherbee, VP of Development; Levi Reilly, Director of Development; and Patrick Sousa, Manager of Development, who all played important roles in the success of this high-profile project.

The newly constructed 17-story, 440,000 RSF, LEED Platinum state-of-the-art office building was developed by SKANKSA USA Commercial Development Team in Boston. Highlights included a chilled beam mechanical system, triple glazing curtain wall, 300 underground parking spaces, world class retail by WS Development, expansive views of the harbor and Seaport, conference and training centers, and virtually column free floorplates. 82% of the building is occupied by PwC, tenants Red Thread and Skanska will be joining them soon. NKGF’s Dave Martel and Bill Anderson are responsible for the leasing and deal negotiation.

Located on what will be the new Seaport Square Green, 101 Seaport connects directly to Fan Pier Park, creating a continuous public space that reaches Boston Harbor and connects to the Harborwalk Grand civic lawn to support active recreation and public events.

SKANSKA is also currently working a neighboring 17-story office tower, 121 Seaport, as well as Watermark Seaport, a 300-unit residential complex both on neighboring parcels.

For those who have yet to hear Shawn’s presentations on SKANKSA’s developments in the Seaport and beyond, his confidence and presence is unparalleled. Shawn has an innate way of making an audience feel comfortable and that day, we all felt we were part of something big. SKANSKA is clearly making development history in Boston and Shawn and his group are leading that charge the titans of the real estate industry. Hats off gents.

NAIOP’s on-going Leadership Lunch and Learn series is open only to Members and offers unparalleled access to top local real estate leaders. Attendees get an inside look at the area’s most active CRE companies and hear about their latest developments, recent activity, upcoming projects, and more. Not yet a NAIOP Member? Join today!

The real estate industry is all about people. Whether you’re a developer working to find an investor or a leasing agent trying to reach potential tenants during lease-up, real estate professionals are all looking to make the personal connections that are vital to success in the industry.

Social media in an incredible tool for reaching the people who drive the real estate industry. NAIOP Massachusetts, in partnership with communications firm Solomon McCown & Company, surveyed more than 100 real estate professionals in June 2015 on how they use social media for their business. How do architects, construction professionals, brokers, developers and professionals in all aspects of the business use digital communication tools? Here are the key takeaways from our survey.

LinkedIn is the most popular social media platform for real estate professionals (Tweet this!), with 52.3 percent of those polled saying they use it. Facebook was a distant second place, with 20 percent of professionals saying they use the world’s largest social media network.

Only 6.5 percent of those surveyed said they don’t use social media for personal or professional use. (Tweet this!) It’s clear that professionals in all areas of the industry are active on social channels.

Social media isn’t just used by young professionals. (Tweet this!) While nearly 81 percent of 21-30 year olds in our survey say they use social media both personally and professionally, 66.7 percent of 61-70 year olds also use digital communication tools.

100 percent of real estate brokers surveyed believe social media helps them to do their jobs. (Tweet this!) The only differentiation is to what degree social media is helpful: 61.9 percent of brokers consider social media to be very helpful, while 38.1% consider it somewhat helpful.

89 percent of brokers surveyed have found new leads through social media. (Tweet this!) No wonder 100 percent of brokers say that social media helps them in their professional lives!

One-third of real estate owners say they only use social media a few times a year. (Tweet this!) A scant 22 percent of owners say they understand social media enough to do it in-house at their companies. (What a missed opportunity!)

How do professionals measure success? In our poll, 65 percent of respondents said that engagement with their target audience was the most important goal for their social media campaign. Sourcing new leads was the primary indicator of success for 26 percent of those surveyed.

Take a deep dive into the data unearthed by the NAIOP/Solomon McCown survey in the infographic below.